No Bump. Social Security beneficiaries will not receive a cost-of-living adjustment (COLA) due to low inflation. This is the third time since 2010 that beneficiaries won't see a raise.

Your Average Monthly Social Security Benefit. The maximum monthly benefit for workers retiring at full retirement age is $2,639. The average monthly benefit for all retired workers is $1,341.

No More Claiming Strategies. Many folks in the past used some popular "file and suspend" claiming strategies. They let married couples claim larger Social Security benefits than Congress intended. These will be eliminated, but couples who are eligible now have until the end of April 2016 to enter into a claiming strategy before the loopholes are zipped up.

Medicare Premiums Go Up – for Some. Without a COLA, 70% of Medicare beneficiaries will not enjoy an increase in Medicare Part B premiums. The remaining 30% will see base premiums rise from $104.90 to $121.80 per month.

Disability Benefits Secured. The reserves for disability benefits were nearing depletion in 2016, which caused a one-fifth cut for these beneficiaries; however, the government has implemented a plan to secure full benefits through 2022 by apportioning more monies to the disability fund during the next three years.

03/10/2016

Hindsight is 20-20, and that's especially true when it comes to basic financial decisions. All too easy to put off or overlook, these steps can make a big difference in your financial picture over time.

Maybe the biggest rookie finance mistake happens when someone from HR sends you a link or gives you a form to enroll in the company 401k at your first job. There's so much else going on, and the usual response is to put it on the "I'll get to it later" list. When "later" becomes years later, you wonder what might have been if you had signed up right from the start.

We've all faced similar decisions, and some we get right—but others leave us wondering the possibilities of what could and should have been. Forbes' article, "10 Financial Choices You'll Regret in 10 Years," discusses some financial decisions that you'll kick yourself for in 10 years. Let's take a look at five of these now:

Starting your budget way too late. Most people think that budgeting means not being able to spend money on the things they really want, but it's really a freeing exercise. You can recognize the areas of your life where you're wasting money on things that aren't important to you. Look at where you can use some money for something that is more desirable. As a result, instead of an expense that you could care less about, you will put your money to better use. If you've been putting off beginning to budget, start today and discover its amazing benefits.

Not paying off credit cards each month. Some of us grab credit cards left and right and keep telling ourselves that we can make the payments later. "Later" can become never, and credit card debt can start to pile on to the point of suffocation. Try to pay off your credit cards quickly to keep more money in your wallet instead of giving it over to some large credit card company. If you aren't able to control your credit card spending, stay away from credit cards altogether. You'll be better off.

Purchasing a financial product without investigating. It's not that hard to do a quick search online, so don't put your money into investment products you don't understand. Do your homework, get a second opinion, and make sure you understand how the investment works and what the real costs are.

Putting the emergency fund on the back burner. Things will happen—that's why we have emergency funds. A good rule of thumb is to have at least six months' worth of living expenses in your fund. Your emergency fund money should be stashed where you can retrieve it quickly without much risk to your capital, such as an online savings account.

Buying a new car that you can't afford. Vehicles are important for many of us, but they are a discretionary purchase. It's transportation, remember, and a big car payment can wreak havoc with your retirement goals. Do you know the differences between a car that's three to five years old and a brand new car? Not many, in most cases. So why spend the extra money?

Not every decision you make will be perfect, but if you can master these, you'll be in better shape than many!

03/09/2016

The joy of welcoming a new member of the family is increased by some generous tax deductions from your Uncle Sam.

The last thing most new parents are thinking about is taxes, but the addition of a new baby to your family has some nice tax perks, according to "The Most-Overlooked Tax Breaks for New Parents" from Kiplinger's. First step: make sure your new addition has a Social Security number.

You'll need an SSN to claim your new baby as a dependent on your tax return. If you don't report the number, it can mean a $50 fine and tie up your refund. Request a Social Security number for your newborn at the hospital when you apply for a birth certificate.

Dependency Exemption. Claiming your son or daughter as a dependent will shelter $4,000 of your income from taxes in 2015, which will save you $1,000 if you are in the 25% bracket. You will receive the full year's exemption, no matter when the child was born or adopted during the year.

Child Tax Credit. A new baby also gets you a $1,000 child tax credit every year until your dependent son or daughter turns 17, no matter when the child was born during the year. Unlike an exemption that reduces the amount of income the government gets to tax, a credit reduces your tax bill dollar for dollar. So, the $1,000 child credit will reduce your tax bill by $1,000.

Increase Your Take-Home Pay. When you claim another dependent, you will cut your tax bill. So decrease your tax withholding from your paychecks with a new W-4 form.

Head of Household Filing Status. If you're single, having a child may allow you to file as a head of household rather than as a single, which enables you to get a bigger standard deduction and more advantageous tax brackets. To qualify as a head of household, you must pay more than half the cost of providing a home for a qualifying person like your new child.

Earned Income Credit. Having a child pushes the cutoff to claim this credit which offsets federal payroll and income taxes for low- and moderate-income workers to $44,650 for 2015 returns. The income cutoff is higher if you have two or more children.

Child-Care Credit. If you pay for child care to allow you to work, and that income is taxed, you can earn a credit if you're paying for the care of children under 13. The size of your credit depends on how much you pay for care and your income.

Kid IRAs. Once a child is working, whether from a job or from being self-employed, he or she can open an IRA. Babysitting money or newspaper delivery money can be added to an IRA. By starting early, the opportunity to grow their IRA over time gives their retirement an additional boost. Parents and grandparents can give the child money for the IRA; however, contributions are limited to $5,500 a year or 100% of the child's earnings—whichever is less. It's often overlooked, but this is a nice way to get your child into the habit of saving for the future.

03/08/2016

The odds of the IRS auditing your tax returns are pretty low, but why take that chance?

Certain transactions and situations that tend to occur more in retirement than during working years are red flags for the IRS. Even though only 0.84% of all individual tax returns are audited, knowing about these tips from Kiplinger's "9 IRS Audit Red Flags for Retirees" will help minimize your chance of being among the "lucky" ones.

Math errors may draw an IRS inquiry, but they don't usually mean an audit. Nonetheless, review these red flags that could increase the chances that the IRS will give the return of a retired taxpayer some very special and unwanted attention.

The overall individual audit rate is only about one in 119, but the odds go up significantly as your income increases—like if you sell a valuable piece of property or get a big payout from a retirement plan.

IRS statistics show that folks with incomes of above $200,000 had an audit rate of 2.71%—about one out of every 37 returns. If you report an income of $1 million or more, there's just a one-in-13 chance your return will be audited. The reverse is also true as the audit rate plummets for those reporting less than $200,000, with just 0.78% or one out of 128 of those returns audited—the majority of these exams were conducted by mail.

Make sure you report all required income on your return because the IRS is good at matching the numbers on the forms with the income shown on your return. A mismatch sends up a red flag and causes the IRS computers to spit out a bill. If you receive a tax form showing income that isn't yours or listing incorrect income, you need to ask the issuer to file a correct form with the IRS.

Taking Higher-Than-Average Deductions. If the deductions on your return are disproportionately large compared with your income, the IRS may pull your return. For example, a costly medical expense could alert the IRS, but if you have the proper documentation for your deduction, you shouldn't be afraid to claim it.

Claiming Big Charitable Deductions. If your charitable deductions are very large compared to your income, it'll be a red flag. Likewise, if you fail to get an appraisal for donations of valuable property or fail to file Form 8283 for noncash donations over $500, you are a bigger audit target. Retain all of your supporting documents, such as receipts for cash and property contributions made during the year.

Failing to Take Required Minimum Distributions. The IRS will check to see that you're taking and reporting required minimum distributions (RMDs). The penalty for not taking your RMD is equal to 50% of the shortfall. Also, IRS looks at early retirees or others who take payouts before reaching age 59½ and who don't qualify for an exception to the 10% penalty on these early distributions. Those age 70½ and older must take RMDs from their retirement accounts by the end of each year, but there is a grace period for the year in which you turn 70½, allowing you to wait until April 1 of the following year.

You can delay taking RMDs from your current employer's 401(k) until after you retire, but note that this does not apply to IRAs. How much you take every year is based on the balance of your accounts on the very last day of a prior year and the life-expectancy tables from the IRS. An experienced estate planning attorney will be able to help you navigate these financial waters.

03/07/2016

A group of thieves have been charged and one has pleaded guilty as an investigation uncovered a ring of theft and fraud perpetrated against elderly men and women.

This is a story that any professional working with seniors finds particularly abhorrent. An investigation by the New Jersey State Police and the Division of Criminal Justice uncovered a scheme by a New Jersey woman, her sister and several others—including an attorney—to steal millions from elderly clients they were supposed to be helping.

A New Jersey State Police investigation led to the indictment of Sondra Steen along with her sister Jan Van Holt. The latter was the owner of a company that offered elderly clients in-home care and legal financial planning. Two other employees pleaded guilty to taking part in the scheme and stealing $125,000 from an elderly couple. Van Holt and Steen were charged with conspiring with a lawyer to steal over $2.7 million from 12 elderly clients.

Van Holt would target potential elderly clients who were known to have substantial assets with no immediate family. They would be offered help through the company with non-medical services such as running errands, managing finances, getting to appointments, and housework. Steen would then serve as the client's primary caregiver.

When they had gained the trust of these elderly clients, they would take control of their finances and add their names to bank accounts by forging power of attorney documents or using false pretenses to obtain control. They then stole from the accounts to pay their own expenses. If the victim owned stocks or bonds, they were cashed out and the funds were deposited into the account allegedly controlled by the defendants. The defendants would also name themselves as executors of the wills and then name Steen as a beneficiary. Authorities began investigating the alleged laundering after the state Office of the Public Guardian referred a case involving one of the victims to the State Police.

Barbara Lieberman forfeited $3 million in assets and her law license, while Steen pleaded guilty to first-degree money laundering. Charges against Van Holt and Hamlett are pending. Steen will be responsible for restitution as well.

03/04/2016

Some law students are getting the opportunity to represent men and women who have served in the military.

A lieutenant colonel serving in the U.S. Army Reserves was in Afghanistan on his third tour of duty, suffering from Post-Traumatic Stress Disorder (PTSD) and enduring a bad foot injury in 2011 when a letter arrived at his home, as described in Harvard Magazine's"Fighting for Veterans, Learning the Law." It was an important, time-sensitive letter.

The letter contained information on how he could file an appeal for disability compensation and stated that he had to respond within 120 days of receipt. But Ausmer wouldn't return home for another five months.

By the time he read the letter, he'd lost his one chance to appeal his benefits case. The Veterans Benefits Administration gave him no help, but a trio of Harvard Law School students did. They took his case, arguing that the clock on an appeals claim should start only after a veteran has returned home—rather than when a letter arrives in his or her mailbox back home.

The students became involved in Ausmer's case in 2013, while at the Harvard Veterans Law and Disability Benefits Clinic. Each year, dozens of students have assisted veterans with legal cases, winning verdicts of local and national importance.

Ausmer's student defenders argued their case in front of the U.S. Court of Appeals for Veterans Claims. The court's ruling in the veterans' favor marked a landmark victory. It allowed recently discharged veterans like Ausmer—whose ability to file an appeal is "materially affected" by their service—to be permitted extra time from their discharge date to appeal.

This decision could help thousands of former soldiers.

The Harvard law students can choose to represent veterans in administrative and federal court appeals by challenging denials of federal and state veterans' benefits—like Ausmer's case; represent clients and their families in estate and financial planning matters; or represent clients in administrative and court appeals on issues of denial of Social Security disability benefits.

The Harvard Veterans Law and Disability Benefits Clinic was created to provide law students with a unique opportunity to help veterans while learning what it means to practice law as a service to others. Students in the clinic also help veterans with issues concerning administrative, disability, mental health, probate, and constitutional law.

03/03/2016

The first quarter of the year is a good time to review your estate plan. It may not need any changes – but chances are good something in your life has changed and your plan may be outdated.

Over the course of time, things change that have an impact on your estate plan. Your children may have married or welcomed a new baby into the family. Perhaps you moved, or maybe you were widowed. Life is filled with changes, at every stage, and your estate plan needs to reflect those changes.

Dairy Herd published a valuable article, "Legal: Review and update your estate plan now," which advised that you should at least have the basic estate planning documents in place. This includes a will, a power of attorney, a medical power of attorney and an advanced healthcare directive (often called a living will). Also, some should look into trusts, depending on individual situations.

Taking the time to prepare these documents now can help avoid fighting and stress for loved ones left behind.

Create a "Death File." After you have your basic estate planning documents in place, gather them in one place and inform two responsible people of the file's existence and location. It can be placed in a home safe, a bank deposit box or on file with an attorney. The person(s) named as your power-of-attorney and executor need to know the location of these documents and have the ability to access them if needed.

Review Documents for Updates. As mentioned above, it's important to review these drafted documents periodically to see if any changes are needed. Also, when you review a will or a trust, look to see if any of the property listed has been sold, transferred, or purchased. If it has, update the documents to reflect the change in ownership.

Check and Update Beneficiary Designations. Not all property passes in the estate by a will. Some assets, like a 401(K), are passed to the beneficiary of the account regardless of what a will says. This is also common with life insurance, pensions, transfer on death accounts, and accounts held as joint tenants with right of survivorship.

Look at Potential Estate Tax Liability. The federal estate tax exemption for 2016 is $5.45 million per person and $10.9 million per couple. To see if tax liability might be an issue, the estimated fair market value of assets needs to be calculated. Talk to Robert A. Gordon of Redkey Gordon Law Corp, an experienced estate planning attorney if your estate may be close to the exemption limit. He will be able to discuss options to avoid the federal estate tax—a whopping 40% on any amount over the $5.45 million exemption.

Think of your estate plan as needing regular maintenance in the same way that your house or car needs to be checked and serviced from time to time. Keeping your estate plan up to date will protect your wishes and allow you to avoid unnecessary headaches and expenses for loved ones.

03/02/2016

Sometimes it's easier to have a conversation on a difficult topic when you focus on the non-emotional aspects of the subject being discussed and have a checklist in hand.

For a generation that is proud of their ability to ignore all kinds of taboos, millennials are no different than any other generation when it comes to discussing end-of-life care and estate planning with their parents. It's up to you, Baby Boomers, to initiate the conversation with your millennial children and make sure that they – and you – understand the basic documents needed for estate planning and end-of-life care.

Wills: A will describes who will be in charge of your estate at the time of your death and to whom you want your assets to be given. You can also use a will to nominate a guardian for your minor children.

Living Trust: This is a common way to transfer assets upon your death and without probate. Typically, a trust will have property titled in it and will document what should happen to the assets upon your death.

Durable Power Of Attorney: This ensures that an individual you select has the authority to make decisions regarding your financial life in the event that you are incapacitated or unable to make decisions on your own, such as financial and legal matters.

Health-Care Proxy: Like a durable power of attorney, a medical power of attorney give a person you designate the authority to make medical decisions on your behalf if you can't make those decisions yourself.

Advanced Health Care Directive: This allows you to list your healthcare preferences and can be used, along with your health-care proxy, to make certain that your medical wishes are carried out.

HIPPA Release Form: This allows those listed on your advanced health care directive and your health-care proxy to access your healthcare information so they can handle issues on your behalf if you are unable to do so.

Tax Documents: Can you believe that death does not stop taxes? Most taxpayers don't have to worry about federal estate taxes, but some must be aware that an estate over $5.45 million is liable for estate taxes, with some exceptions. Some states also have a state death tax in addition to federal estate taxes.

Robert A. Gordon of Redkey Gordon Law Corp, an experienced estate planning lawyer can help you properly prepare these documents in advance. He can also facilitate the tough discussions with family members.

03/01/2016

We'd all rather plan a vacation than confront our own mortality. But planning for retirement, estate planning and vacation planning are all necessary to achieve your goals.

The same people who put off estate planning have no problem finding the time to plan their vacations. And far too many people think the only plan they need for retirement concerns being able to pay bills.

Think of estate planning as how you would like things to be, and to be divided, to minimize stress on your loved ones and avoid nasty family fights that can occur after the funeral. You can minimize problems and decide some of the tough issues before you pass away. Estate planning is a thoughtful gift for your family and friends.

Retirement planning is much broader—and your estate plan should be included as an important piece of your retirement plan. An estate plan has three basic goals:

To give you control over your assets as long as you are able to do so.

To protect you and your loved ones in case you become incapacitated.

To distribute your assets in accordance with your intentions after your death.

Again, a retirement plan has broader goals such as:

Ensuring that you have enough assets to support your retirement lifestyle.

Ensuring that potential health care issues can be met in the location where you retire.

Proximity to friends and family.

Deciding what to do with the time you previously devoted to your job.

Creating an estate plan that is consistent with your goals.

No one says you have to have an estate plan once you graduate from high school, but once you start working, that's the time to open an IRA account, start saving and begin planning for your future. Early planning generally ensures that you have more options, both for retirement and estate planning.

Robert A. Gordon of Redkey Gordon Law Corp, an experienced estate planning attorney can help you begin your planning.

Understand your parents' ideas about their future living arrangements when and if they become unable to care for themselves. If they want to stay in their own home, familiarize yourself with the available community resources for support and research alternative living arrangements in the event that remaining at home is no longer a viable option.

Analyze the type of medical coverage your parents have and its coverage. Get the name and telephone number of their primary care physician and any specialist they are seeing. Have a sense of their medical history and condition.

Estate planning includes legal, financial, and end-of-life issues. See if your parents have an advance health care directive, a will and/or trust, and a general power of attorney for finances. Find out who has copies of these documents or where they're kept. Also, get the contact information for their estate planning attorney.

Talk to your parents about their financial resources, both income and assets—this is critical if you need to place them in a long-term care facility or apply for government programs. Also, find out if they have long-term care insurance and what it covers.

Last, the hardest conversation may be about their final needs. See if your parents have made funeral arrangements and have prepaid them. If they don't have these plans, encourage them to tell you what they want.

Your parents know they need to have these conversations. You can help by taking a proactive role and fostering these conversations while they are still able to participate and tell you what they want. If you have siblings, include them in these discussions as well.